If the economy is in short run equilibrium then
A) real GDP cannot be equal to potential GDP.
B) real GDP can be greater than, less than, or equal to potential GDP.
C) nominal GDP equals potential GDP.
D) real GDP equals potential GDP.

Question

Quizplus · Accepted Answer

In the short run, it is possible for the economy to be in equilibrium with real GDP being greater than, less than, or equal to potential GDP. This is because short-run equilibrium is determined by the intersection of AD and SRAS curves, which can shift and change due to factors such as changes in consumer spending, investment, government spending, and net exports.

If the Economy Is in Short Run Equilibrium Then